CALL ME MAGGIE

The great economist James K. Galbraith describes two factors that contribute to financial euphoria – the special fiscal  insanity that has led to more than one collapse of markets, the most spectacular being the great collapse of 2008.

The first contributing factor, in paragraph no. 1 below, is a systemic aversion to history; and the second factor, in paragraph no. 2, is the mistaken belief that financial success can be connected to intelligence.

There is a brilliant description of the Peter principle in paragraph 2:  CEOs are mentally predictable, intellectually unchallenging, cavers.  The system that supports them is soft, uncritical and in the end error prone.

Our market fundamentalists are just as inbred and parochial as our religious fundamentalists.

Here is Galbraith:

Contributing to….euphoria are two further factors little noted in our time or in past times. The first is the extreme brevity of the financial memory. In consequence, financial…